We know he’s the numbers wizard behind Author Earnings—a collaboration between himself and self-published mega-author Hugh Howey. And we know that he’s anonymous. But that’s pretty much it.

In the past two years, Data Guy’s Author Earnings reports have become an increasingly popular resource for authors, shedding light on aspects of the publishing industry that were going previously unreported.

But the reports have also spurred a great deal of controversy.

. . . .

So based on all the research that you’ve done into ebook sales and where the money is going, is there one piece of strategic advice that you’d offer to Big Five publishers to do things differently than they do now?

There definitely is, and I think that DBW may be an opportunity to dig into some of these trends in more detail. In general, my observation is not something that Hugh and I alone are saying. High ebook prices don’t really hurt mega-selling authors with long established careers in all of the airport book stores and Walmart, but what they do that is not good is they damage the discoverability and also earnings of mid-list authors. And particularly the vast majority of debut authors who are brand new. No one knows who they are. They need to first find their own audience and fanbase among avid readers before their publisher will put a significant amount of marketing and funding behind pushing them to a more casual, broader audience. The industry’s changed, and the dynamics are not the same as they were when today’s traditionally published mega-sellers first came up a decade or more ago.

Most avid readers today read digitally. When you look at who’s reading 50 books a year, 100 books a year, those are the folks who are giving new authors a shot. I’m not talking about the seven-figure advance, Pulitzer Prize, one-of-them-a-year mega-debut author; I’m talking about the vast majority of traditionally-published debut authors who are trying to build a name for themselves. And the digital readers, these avid readers, are basically bypassing those authors, because they don’t recognize the names, and the price is off-putting to them.

Strategically, if you’re a Big Five publisher, supporting those authors now with lower ebook pricing, would mean you’re building a healthy, sustainable pipeline of intrinsic revenue streams you control down the road. But by not doing so, instead you become increasingly reliant on being able to make opportunistic acquisitions of these big blockbuster properties that originate outside of the traditional publishing industry. You have to do that quarter after quarter, year after year, without fail. It just doesn’t seem like a sustainable strategy long-term. So that’s the piece of strategic advice that I’d offer.

. . . .

Do you feel that with every new iteration of this report you guys are getting more and more accurate and getting closer to the actual truth, if there is one?

Absolutely. In fact, one of the biggest jumps in accuracy was—our rank-to-sales conversion method had gotten a bit long in the tooth. And as we headed into the end of last year, we were looking at it and I go, “You know what? This is out of date and it’s going to be too conservative.” And because we mostly avoided making statements about absolute sales that Amazon is doing and instead saying, “Hey, looking at relative measures of sales, this is how the pie breaks down.” That kind of accuracy doesn’t have to be precise, but at the same time I wanted to upgrade our methods so that we could look at quarter to quarter sales and say, “What’s happening to the size of the pie? Is it growing? Is it shrinking? How fast?” And so with the February report that we did, we upgraded our approach significantly.

Now it’s based on real sales data—raw sales data—from exactly that time period provided by about a dozen authors, and an increasing number every day. And these include very high-selling authors, as well as authors who aren’t selling well. And so we pretty much have real-time data points up and down all the different sales-ranks, from one or two of the absolute top-selling books on Amazon down to books that are hardly selling at all. Hundreds of books. So we factor that in.

. . . .

This is a bit of a long-winded question, but it’s the one that I’m most curious about. Your feelings or anyone’s feelings toward the Big Five publishers aside, how do you personally think the rise of self-publishing has affected our literary culture as a whole? Not too long ago, we had gatekeepers who let only minorities of potential authors past. Now with self-publishing and further avenues to get a book out there to an audience, literally anyone can be an author, and as a result, the number of books published per year has, frankly, exploded. For individual authors, this is great news: they can now achieve their dreams and publish a book. But taking a step back, with the gatekeepers not holding all the power, and a surge in books published, how do you feel this has changed the culture surrounding books? To put it another way, is the value of a book at all watered down now that anyone can be an author?

This is a question that I’m not going to be particularly good at answering. After all, I’m known as “Data Guy,” not “Literary Subjective Opinion Guy.” [Laughs] But with that said, first off, I have no particular feelings about the Big Five publishers, positive or negative. And I think this makes me a little different than a lot of the folks we hear from on various author groups. I’m a brand new author and a new entrant into this industry. I’ve never submitted a query to anyone. I hear a lot of this angst, and there seems to be bad blood one way or another. It’s just lost on me. I don’t get it. I get that some people in this industry feel very strongly about the things that have happened in the past, but for me it’s just a brand new, wide-open field. Let’s see what there is to learn.

With that said, I do think that today’s wide-open, democratic world of publishing is a good thing. It’s been a tremendous boon for literary culture and freedom of expression. The gatekeepers were an economic necessity in the past. It wasn’t so much about quality, although these two concepts tend to get tangled a lot, because nobody wants to think of themselves as just serving an economic function alone when working in the arts. It was more about choosing which manuscripts were worth taking a financial risk on. Well, today that risk is largely mediated by the fact that you don’t have to take a big risk to get a book out there in the public eye. At the end of the day, the only gatekeepers that matter are readers.

If they like what’s out there, the books will tend to do well, gain visibility, spread through word of mouth. And if they don’t, essentially it’s irrelevant in the market, and yet it may not be an irrelevance for that author. That author may have achieved their dreams, and they have finally been able to put their book out, and the three people who read it will be the ones who shared that experience. Maybe that’s all that matters to them.

So I think on the whole it’s a positive thing. Readers benefiting from a far greater wealth and diversity of high quality books and ideas. Making it all available to them, and more importantly now affordable to them. Democratization, greater diversity, and more feelings expressed—it’s kind of hard to see any downside. Not that I have any strong opinions about this or anything. [Laughs]

33 Comments to “DBW’s Wide-Ranging Interview with Data Guy”

The first question and the last question are actually related: and in a way that Real Big Time Publishers should know, but seem to have forgotten.

More, cheaper books means a more literate populace. This is true whether the books are high art or pulp. However, if the High Art were more and cheaper, that would be even better.

Look at what the high literary publishers did during WWII: they gave free books to the troops. Not just the paperbacks, but their whole line, top to bottom. And the result was a generation who not only read books, loved books, but also a generation who was open to more interesting and literary ideas. Having stronger ideas underneath the work was suddenly a plus even with genre. “Literary Merit” blossomed everywhere.

And the publishing establishment has only themselves to blame if, over the last forty years, the population reads less and thinks less about books now.

If they’re really worried about the intellectual welfare of the nation, then they’d better start giving away lots of free books, and lowering their prices on the rest. Otherwise, they should just up and admit they don’t really care about the literary health of the nation.

Otherwise, they should just up and admit they don’t really care about the literary health of the nation.

Of course they don’t care about the literary health of the nation. That’s not why stockholders invested their money.

I don’t want them caring. That’s the last thing I want them to do. I want them to pursue their own profit however they can. That’s the genius of capitalism. It channels indvidual greed into a social good regardess of anyone’s intentions.

They can perpetuate the notion they are motivated by literary health only because a subset authors and readers want to believe it. If it works for them, go for it.

There was also The Practical Cogitator, a collection of (nonfiction) excerpts that one of the editors started in WWI and expanded for WWII. It was intended to be something small enough to carry in a pocket, and each item the best example of its kind and worth re-reading multiple times. A very thought-provoking book I have enjoyed myself, and it no doubt expanded the mindset of many a soldier.

A similar volume but for fiction–wouldn’t that be cool? Small nuggets of all kinds of literature, like a candy sampler, to try to see what you like.

High ebook prices don’t really hurt mega-selling authors with long established careers… but…they damage the discoverability and also earnings of mid-list authors. And particularly the vast majority of debut authors who are brand new. No one knows who they are. They need to first find their own audience and fanbase among avid readers before their publisher will put a significant amount of marketing and funding behind pushing them to a more casual, broader audience.

That’s a really interesting point that I’d not discerned until Data Guy articulated it. I’d thought about high ebook prices hurting trad pubbed authors in general, but had not realized that trad pubbed debut authors might be essentially crippled from the get-go.

I venture that most of the habitues of TPV are avid readers. Numbered by heads, we form a minority of readers. Numbered by books bought and read each year, we comprise the majority.

I buy and read 50+ books a year. All told, I have just over $200.00 in my ereader (Kindle, cover, light, skin). Given the number of books I have on my Kindle, the reader adds less than 35¢ to each book.

The megasellers like Lee Child sell to the casual reader; that is, someone who reads one, two, three, maybe four books a year. (By my standards, these people don’t read. So Lee Child writes for people who don’t read. 😉 ) I don’t think it makes economic sense for them to buy a Kindle. The only ereader price point that makes sense for them is $0; that is, a gift.

Romance readers are avid readers. Some read 150 books a year. It makes sense for them to use Kindles. But it also means that imprints like Harlequin may be the canaries-in-the-mines of the publishing business. Are the majority of their costumers reading paper or pixels? That is, are the majority of their sales in units pbooks or ebooks? Are romance readers price sensitive? Do Harlequin and other romance imprints find their business disrupted now?

“In 2013 Harlequin’s EBITDA(1) was $56.3 million, a decline of $20.9 million from 2012. Consumer book publishing remains a relatively stable industry overall. However, the book publishing industry and Harlequin’s business have been affected by a number of factors, including shifts in reader preferences from print to digital, the concentration of online retailers within North America, increasing opportunities for authors to self-publish and a contraction of the retail print market. The shift from print to digital slowed significantly in the North American market in 2013, where there is little growth in digital from an overall industry perspective. International digital markets continue to develop to differing degrees based on local market conditions.”

Of course, when they say “the industry” they mean the traditional publishishers.

Torstar being one of the strongest practitioners of the “Fresh Produce” model, they sold Harlequin off to NEWS CORP who apparently saw more value in the captive copyrights.

Weirdly and sadly, I have come to believe that I know more about the answers to those questions than anyone else. I don’t have time to go into that all now (gotta go to work), but I suspect, based on your previous comments here, you could help me provide better answers to those questions by giving me a bit of advice on analyzing survey research data. If you are willing, I would like discuss this via email. My email address is razoroftruth at [the domain run by Google for its email service].

I have the raw data from a set of Pew Research surveys and I have some questions about the soundest ways to handle some imperfections in the dataset. Btw, would love to hear from anyone who has professional experience in this area. I am just smart enough to know I need to a bit of help.

The lightblub turned on for me one of the first times Lee Child was commenting here, when he talked about selling to people who buy 3-4 books a year. He has a different audience than most authors. Not just larger, but a different market segment. So what he’s seeing is very different than what mega-selling indie authors are seeing.

And for romance, many publishers went under or downsized in the last few years, including digital publishers. The indie revolution killed them. Nearly every romance author I know is indie or hybrid.

Romance sells at least 50/50 digital/print, if not more digital. And yes, readers are price sensitive. One of the biggest shifts is from used books to new ebooks. I’ve heard several people say they used to get bags of used books and now buy low priced ebooks. Authors are getting money they used to miss out on.

Indeed, though I rarely bought used books, I just went to the library instead. But now I can buy new, clean e-books and the author gets money from me sooner rather than later. I’m more willing to risk new-to-me writers, whereas before I would often try them at the library, first.

It’s amazing how many authors have not caught on to that benefit (KKR has a post on them today), but I’m reminded that the average tradpub author does not profit from e-books, since their contracts ensure don’t get much in royalties.

He wouldn’t be airport wallpaper today, selling to that 3-book-a-year crowd he keeps talking up, if fifteen years ago voracious readers — readers like me — hadn’t been willing to try out a book by an unknown midlister named Lee Child, selling spine out off the back of a bookstore shelf. We only gave Killing Floor a shot back then because we’d already torn through all the Tom Clancy, Dean Koontz, and other mega-selling authors we liked, and we were still hungry.

Back then, we prowled the bookstore aisles for new authors to try. Today, we’re reading reasonably-priced ebooks to find them, instead.

Which is why, if you want to “aim high” now, you go the Andy Weir route not the Lee Child route. The career path Lee took and now keeps pimping is dead. Bridge out ahead, hoss. Road closed. Unless you land a seven-figure deal right out of the gate. Because tomorrow’s Lee Child isn’t some unmarketed trad-pub midlister, struggling to sell enough overpriced $15 ebooks that her publisher doesn’t drop her, dreaming that she’ll somehow “break out”.

Tomorrow’s Lee Child is publishing indie right now, and building their own career from the ground up.

Totally right, and also, Lee Child isn’t even on the level of a Tom Clancy who created a big library of intellectual property and spun off successful films, games, etc. (And, who also, by the way, struggled to find a publisher for his first book, had to go around the usual NT literary scene by getting published by the Naval Institute and who broke ground in the creation of a huge audience for military thrillers.)

Lee’s model really seems to be how to make as much money as possible with as little work and effort as possible (circa 1997). Step 1: become a successful television executive. Step 2: Write a thriller novel as part of a series and write one per year in exactly the same series. Step 3: Don’t take any more steps.

Terrific that it worked easily for him. A smart guy who I hope is enjoying his money. But a kind of weird combination of creative talent, business savvy, insider connections and lack of greater ambition.

Oh, I forgot, Step 4, tell everyone how the book publishing business works.

His career choices not only don’t seem like a replicable model (particularly today), it seems like a a model only a tiny number of individuals would even have an interest in pursuing. Like, I can imagine there are many people who would love to create their own restaurants like Wolfgang Puck, or even get rich in fast food like Subway, but how many people specifically aim to get into the restaurant business because they want to have a chain of restaurants that serve in airports? Which is really kind of what he is talking about.

While he isn’t the kind of writer I think most writers dream about becoming, he does seem to be exactly the kind of writer big publishers want to deal with. Someone who is completely comfortable in a a specific niche, doesn’t write too much, never wavers into new areas, and apparently is happy to turn off potential readers by defending the current exclusionary system as the best of all possible worlds.

I’m pretty sure we’re less than a decade away from $0.00 e-readers, or at least sub-$10.

Amazon is clearly willing to take a hit on the devices so they can sell content, and they’ve been discounting kindles with ads on them from the get-go. It’s only a matter of time until they can manufacture them cheaply enough that they can offer a free kindle with several free first-in-series books pre-loaded, just to hook in new customers to their content empire.

And that will bring a whole new flood of readers into the ebook world, including the 4-books-a-year Lee Child crowd, and some avid readers too. Currently several of the most avid readers I know are die-hard paperback people, because they happen to also be the kind of people that still don’t own a smartphone or more than one computer. But once kindles full of great ebooks are available for free or <$10? How long do you think their love for dead trees will hold out?

I only see the ebook market growing from here, especially as tech-native generations grow into novel-reading age. They aren't merely "tech-savvy", they are 100% tech-required. For most of these kids, if it isn't available in ebook format they simply won't read it– there's too much other content waiting in line for their eyeballs.

My husband & I are avid readers, and it’s just about all in ebook form today if at all possible. We’re running at about 1000 books/year (not all of them read immediately, of course), and that’s par for the course over the last several decades.